© 2023 Connecticut Public

FCC Public Inspection Files:
WEDH · WEDN · WEDW · WEDY · WNPR
WPKT · WRLI-FM · WEDW-FM · Public Files Contact
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

Stocks drop as fears about the omicron variant reach Wall Street

AILSA CHANG, HOST:

Fears about the omicron variant hit Wall Street hard on Monday. The Dow closed down 433 points, or 1.2%, continuing a global sell-off. As NPR's David Gura reports, investors are on edge about how this new variant will affect the global economy.

DAVID GURA, BYLINE: The Netherlands imposed a nationwide lockdown. The World Economic Forum postponed its annual gathering of executives and heads of state in Davos, Switzerland. And stocks fell worldwide. Countries and organizations are reacting to how fast this COVID variant is spreading, and that's weighing on investors. Eric Freedman is the chief investment officer in the Asset Management Group at U.S. Bank.

ERIC FREEDMAN: The biggest concern that markets have is that no one seems to have an edge on the path forward.

GURA: COVID is spreading during the busy holiday season, and investors worry restrictions could once again impact global travel and governments could impose more lockdowns. Shares in some travel companies were hit on Monday, including Southwest Airlines, along with restaurant chains. Oil fell more than 5%. This has added more uncertainty to an environment where there was already a lot of it. Investors were already concerned about surging inflation. Central banks will start to raise interest rates to fight rising prices. The Fed Reserve has said it could raise interest rates three times in 2022, which means borrowing costs would go up for companies and consumers.

FREEDMAN: What we don't know this time, in addition to, of course, the great medical considerations around a variant, is just how responsive will central banks be?

GURA: Policymakers already used a lot of ammunition during the first part of the pandemic, and it's unclear what more they could do. And the worry is the new variant could have a significant impact, shutting down travel and exacerbating problems with supply chains. But of course, we've seen this story play out in markets before. When the delta variant first emerged, markets tumbled. But then they bounced back as the economy has continued to reopen. Savita Subramanian is the head of U.S. equity and quantitative strategy at Bank of America.

SAVITA SUBRAMANIAN: The market has continued to shrug off these concerns. We've remained in this sort of reopening path.

GURA: But for now, things will be volatile. Historically, this is a quiet period for markets - just days away from Christmas and close to New Year's. It's a time when investors tend to sit on the sidelines and the amount of buying and selling isn't high. That tends to magnify volatility, making drops like Monday's seem more severe.

David Gura, NPR News, New York.

(SOUNDBITE OF ASH WALKER'S "BAGGER") Transcript provided by NPR, Copyright NPR.

David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.

Stand up for civility

This news story is funded in large part by Connecticut Public’s Members — listeners, viewers, and readers like you who value fact-based journalism and trustworthy information.

We hope their support inspires you to donate so that we can continue telling stories that inform, educate, and inspire you and your neighbors. As a community-supported public media service, Connecticut Public has relied on donor support for more than 50 years.

Your donation today will allow us to continue this work on your behalf. Give today at any amount and join the 50,000 members who are building a better—and more civil—Connecticut to live, work, and play.